Vol 21 (2024) - Issue 6

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Why a Sanction Order Pursuant to Part 26A UK CA Cannot Be Recognised in Germany: Part One

Synopsis
Preventive Restructuring Frameworks based on the Restructuring Directive, more precisely court confirmations of restructuring plans, are automatically recognised in EU Member States on the basis of EIR Recast as long as they are contained in Annex A of EIR Recast. Due to Brexit, the EIR Recast is no longer applicable to UK. Sanction orders stemming from restructuring proceedings pursuant to Part 26A UK CA cannot be included in Annex A. This poses the question as to whether said sanction orders can be recognised in other states. This paper is part of a two-part series of papers appearing in two issues of the ICR and focusing on the legal situation in Germany, since the UK was a desirable restructuring destination for German debtors or those with assets situated in Germany in the past.
It will take into account how recognition of sanction orders stemming from UK preventive restructuring proceedings preceding Part 26A UK CA was handled so far. This paper will elaborate on German provisions potentially suitable for recognising such a sanction order, depending on the comparability of insolvency
proceedings, typical civil procedures and preventive restructuring frameworks. In this paper, the scope of the examination concerns whether a recognition provision stemming from German international insolvency law appears suitable for a sanction order concerning Part 26A UK CA. The examination will be continued in the next issue. In the next issues' part of this series of papers, it will be outlined whether a provision for the recognition of a sanction order pursuant to Part 26A UK CA can be found in German civil procedural law or international law. Before examining specific recognition provisions, this first paper aims to illustrate how the recognition of such a sanction order could be approached from a methodological point of view in a civil law jurisdiction. Conclusions about the recognition of such a sanction in other EU Member States could be drawn from this analysis.